Nationwide Shutdown, Rising Protests and a Leadership Reshuffle Deepen Iran's Crisis as Oil Falls 20%

Iran is experiencing a countrywide shutdown triggered by intensifying protests and a deepening political and economic crisis. This government-ordered shutdown has impacted businesses, educational institutions, and government offices spanning 21 provinces.

What Happened: The escalating protests have led to violent confrontations, resulting in the death of a member of Iran's paramilitary Revolutionary Guard. This incident, marking the first fatality among security forces during these protests, took place in Kouhdasht, a city in Iran's Lorestan province.

Video evidence shared by the People's Mojahedin Organization of Iran (MEK) depicts severe clashes between protesters and security forces across various cities.

Protesters were seen chanting slogans against the regime and facing off with security forces in crowded streets.

As per the report by the Fox News, the shutdown, affecting two-thirds of Iran's provinces, comes at a time when President Masoud Pezeshkian is dealing with escalating public discontent driven by inflation, unstable currency, and falling living standards.

This turmoil coincides with a series of significant leadership changes, further adding to the prevailing uncertainty.

Despite oil prices posting one of their steepest annual declines since 2020, Iran's ongoing protests and internal unrest remain an underappreciated geopolitical risk for global energy markets.

In 2025, crude prices slid nearly 20% as oversupply fears dominated sentiment—driven by higher OPEC+ output, flat demand growth, and persistent sanctions on major producers including Iran, Russia, and Venezuela.

Also Read: Trump Reportedly Told Iran It Was OK To Strike Back After US Attack: ‘I Said, ‘Go Ahead, I Understand”

Brent crude settled the year around $60.85 a barrel, while U.S. WTI closed near $57.42, reflecting a market that has largely priced in weak fundamentals rather than geopolitical disruption.

However, Iran's current crisis introduces a layer of uncertainty that could quickly alter this balance. As a key oil producer operating under sanctions, any escalation in protests that disrupts production, export logistics, or regional stability—particularly around the Strait of Hormuz—could inject a fresh geopolitical risk premium into prices.

Even limited supply interruptions or heightened shipping risks may tighten markets in the short term, countering the prevailing oversupply narrative.

While analysts such as BNP Paribas expect Brent to dip toward $55 in early 2026 before stabilising near $60 as supply growth normalises, Iran's domestic instability could cap downside risks. If unrest intensifies or spills over into broader regional tensions, oil markets may see sharper price volatility than fundamentals alone would suggest.

While 2025 has been defined by surplus and soft demand, Iran's internal turmoil remains a potential catalyst capable of reshaping oil price trajectories at a time when markets appear complacent about geopolitical risk.

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